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Indian shares are set for a muted start on Friday, tracking Asian peers, after U.S. economic data added to concerns of potential delay in the onset of Federal Reserve rate cuts.

India's GIFT Nifty was trading at 21,776 as of 8:06 a.m. IST, indicating that the Nifty 50 will open near Thursday's close of 21,717.95.

Wall Street equities closed higher overnight after weekly data showed that the number of Americans filing for unemployment benefits dropped to 218,000, below expectations.

While the data, which demonstrated resilience in the labour market, strengthened expectations of a soft landing in the U.S., it also hurt hopes of early U.S. rate cuts.

Asian markets opened lower on Friday. [MKTS/GLOB]

India's blue-chip Nifty 50 and Sensex indexes dropped 1% each on Thursday after the Reserve Bank of India (RBI) kept its inflation forecast for fiscal 2025 above its target of 4%.

The RBI, while keeping rates unchanged for the sixth consecutive meeting, as expected, reiterated it will not bring down rates until the consumer price inflation falls below its target, signalling that interest rate cuts may not be imminent.

Foreign institutional investors sold Indian shares worth 49.34 billion rupees ($594.8 million) on a net basis on Thursday. Domestic institutional investors purchased 55.12 billion rupees of shares.

While data earlier in the week showed foreign outflows from domestic equities in January, inflows into India's equity mutual funds jumped to a nearly two-year high in January, led by sustained interest in small-caps. This is the 35th consecutive month of equity inflows.

Sustained retail participation and a surge in Systematic Investment Plan (SIP) accounts underscores the unwavering commitment of domestic investors towards disciplined wealth creation through mutual funds, said Venkat Chalasani, CEO of Association for Mutual Funds in India.

STOCKS TO WATCH:

** Life Insurance Corporation of India: India's largest insurer reported a nearly 50% rise in third-quarter profit, on higher shareholders' fund transfer.

** Biocon: Drugmaker posted profit in December quarter, helped by biosimilar boost, divestment gains.

** Bharat Heavy Electricals: Company won order worth 55 billion rupees from Haryana Power Generation Corporation.

** Key earnings on Friday: Hero MotoCorp, Tata Power Company, Zydus Lifesciences, MRF.

($1 = 82.9520 Indian rupees)